Other Matters

National Minimum Wage

With effect from October 2002, the basic national minimum wage rate increased from £4.10 to £4.20 per hour for workers aged 22 and over (except those on accredited training schemes). Workers, who are 18 or over, but under 22, are entitled to a rate of £3.60 per hour. From October 2003, the minima will rise to £4.50 and £3.80 respectively.

And if you have underpaid employees in the past there is now no escape!

The National Minimum Wage (Enforcement Notices) Act 2003 enables enforcement notices to be served on an employer, requiring the payment of underpayments, to former as well as current employees, going back up to six years.

Opt-Out Clause

There have been concerns that the European legislation will lead to the abolition of the Opt-Out clause, whereby workers can voluntarily exclude themselves from the Working Time Directive, particularly the 48 hour week. A survey in January revealed that 80% of organisations wanted to keep an opt-out clause and it is now unlikely to be abolished, although it may continue in a restricted form, applicable to certain sectors or generally applicable with an upper hours limit. In any event, the present regime is unlikely to be changed before the end of 2005.

Rolled Up Holidays

If you have traditionally included holiday pay in the weekly pay packets of your employees so that they don't get paid when they are actually on holiday, then you should consider reviewing your practices following a recent case in the Scottish courts.

The ruling stated that holiday pay should be paid when the holidays are taken. Otherwise there is the possibility that holidays will not be taken, which is contrary to the Working Time Directive.

If you do not wish to pay for holidays twice, it may be worth considering amending your procedures!

The maximum compensation for unfair dismissal is £53,500 and a recent case has confirmed that this must relate to financial losses as a result of the dismissal ie loss of future earnings, expenses and lost benefits, including delays in finding new employment due to stress related illness. It does not include any compensation for hurt feelings or personal discomfort arising from being wrongfully dismissed.

Gross misconduct should be straightforward. But a recent case has highlighted that this is not always so. The High Court found in favour of a managing director who was sacked for absence from work and not working normal hours, clear breaches of contract.

However, he had carried out much of his work in clubs, cafes and walking in the park over a period from 1993 to 2001. The length of time this occurred demonstrated that his employer accepted his method of working.

Gross misconduct has to be clearly defined and then proved. It cannot be done retrospectively although there is broad scope for the employer to define it. Indeed, some areas are very straightforward eg theft, aggression, criminal activity.

The lesson from this case is that if behaviour is allowed to continue even when contrary to workplace regulations or contractual obligations, it is said to be consented to by implication. An employer’s silence effectively waives the rights to enforce regulations and invalidates any potential action.

The first draft regulations for the proposed mandatory disciplinary and grievance procedures introduced by the Employment Act 2002 have been published by the DTI. They will take effect on 1 October 2004.

Under the proposals, employers and employees would be compelled to follow a minimum three stage process to ensure that disputes are discussed at work. The process would require that:

• the problem is set out in writing with full details provided to the other party
• both parties meet to discuss the problem
• an appeal is arranged if requested.

If these procedures are not followed the dismissal will be automatically unfair and a tribunal will be able to reduce or increase awards by up to 50%.

Consultation is currently under way to ensure that there is clarity surrounding the statutory requirements and ACAS guidelines.

As this will apply to all employers, now is the time to start reviewing the adequacy of your formal disciplinary and grievance procedures.

Please contact us if you would like more information or to discuss any of the issues raised in this bulletin.